Canyon Ranch Case Study

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Case Study 7:
Canyon Ranch

Written for:
Professor Efrem Mallach
MIS650

Authored by Group 2:

December 9, 2009

Case Description

Background

Canyon Ranch was the undisputed leader in the luxury segment of the spa industry. It had both breadth and depth of offerings, and integrated portfolio of treatments from traditional spa and fitness to health and healing services. Canyon Ranch was considered the gold standard in the industry as a result of being heads and shoulders above the industry due to their attention to guest needs. Its astonishing array of services made available under a single roof and its Health and Healing department set it apart from most competitors.

IT systems started off being used solely for support functions; e.g. property management, reservations, spa and wellness services scheduling, accounting, purchasing, and payroll. As a result of the need for business Intelligence, decision-support functionalities, and expected growth and turnover in management, IT was beginning to be viewed increasingly as strategic and operational, and personnel saw the potential value of information to enable better evidence-based decision making.

Stakeholders

• Canyon Ranch Company Owners
• Canyon Ranch Employees
• Past and potential new clients of Canyon Ranch
• Third-party partners such as the Venetian Resort, the Gaylord Palms Resort & Convention Center, and Queen Mary 2 • Vendors and suppliers
• Neighboring property owners and businesses to the two destination resorts. • Competitors

Assumptions

• Canyon Ranch is “the Gold Standard” and is head and shoulders above the competition at the time the below analysis is taking place. • Canyon Ranch is financially in good shape and has money to invest for future growth and expansion. • The economy will continue in the same status as it has been during Canyon Ranch’s successful years for the near term (i.e. at least 2 to 3 years which is a reasonable time to expect a return on investment). • A Business Case Analysis (BCA) would attest that there would be a return on investment of implementing a CRM in a two-to-three year period.

Critical Issue

Historically in the SPA industry, little attention had been paid to the potential benefits offered by IT. Traditionally, the industry had been a high-touch, people intensive business. Computerization was viewed as a threat due to the perception that it would depersonalize and dehumanize the experience. It was felt that because many spa goers were seeking an escape from their stressful office lives; therefore, they were very careful to avoid any technology that might damage the “carefully choreographed atmosphere of the setting.

Objective

From the perspective of Canyon Ranch, the objective was to attempt to grow the business while maintaining the fundamental characteristics of Canyon Ranch and ensure that Canyon Ranch maintained its competitive advantage in the face of increasing competition.

Executives were constantly seeking ways to leverage the preeminent position of being the undisputed leader in the destination segment of the spa industry to extend the Canyon Ranch brand and to maintain future dominance in the destination spa segment.

Should Canyon Ranch in the Berkshires develop a clear Customer Relationship Management (CRM) strategy and make it a cornerstone of its positioning as a preeminent destination spa? If so, what should this initiative look like? What is the value of substantial amounts of data that are generated during the customer experience? Can this data be used during prospecting? Can this data be used during the customer’s stay? Can the data be used after the customer’s stay?

Analysis

5.1 Decision Criteria

The significant decision criteria are effectiveness, cost, return on investment and implementation time. The initial outlay of capital for the CRM strategy will outweigh the cost just...
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